AM Best has affirmed Hollard’s A- credit rating and says the outlook is stable.

Hollard’s balance sheet strength was strong, its operating performance adequate, its business profile neutral and its enterprise risk management appropriate, the ratings agency said.

Hollard has set aside provisions for potential COVID-19 related claims arising predominantly from business interruption coverage.

Hollard’s average return-on-equity ratio was 4.6% from 2016 to 2020. It reported an underwriting loss and a combined ratio of 102.1% in fiscal 2020 as a result of COVID-19 related reserve provisioning.

“However, its combined ratio between 2016 and 2019 had exhibited an improving trend attributable to a stable loss ratio and expense ratio improvements,” AM Best says.

Future revisions of COVID-19 related reserves would be a key driver of Hollard’s results over the near term.

As a result of rapid expansion over recent years, Hollard is strengthening of its risk management capabilities in line with an increased operational scale and risk profile.

Hollard had a 3% share of Australia’s non-Life gross written premiums last year, “maintains a strong market position in certain niche segments, including the pet insurance sector,” and has recorded robust premium growth over the past 10 years, the ratings update says.